General Creditors of the Estate of Harris v. Cornett , 416 P.2d 398 ( 1966 )

HICKS EPTON, Special Justice.

This litigation involves the estate of Vera Cunningham Harris, an Osage Indian Al-lottee who died testate. It arose in the County Court of Osage County, Oklahoma, where after trial the aggrieved parties appealed to the District Court of Osage County in which trial de novo was had. Appeal was taken from the District Court judgment to this court. The nature of the judgments is reflected in the discussion of the issues.

When appeal was lodged in the Supreme Court, all of its regular members filed their disqualifications to sit in this cause and the Governor of this State, the Honorable Henry R. Bellmon, appointed John Ladner, Hicks Epton, Milton C. Craig, W. E. Mad-dux, Bruce McClelland, R, Place Montgomery, Reuben K. Sparks, Wilson Wallace, and Walter J. Arnote, to serve as Special Justices of this Court to hear this cause.

Although no formal issues were made up in either the County or District Court of Osage County, Oklahoma, it is clear from the pre-trial proceedings in both trial courts, from the statements of counsel in the record and in the oral arguments to this court and the partial dismissal of appeal heretofore filed in and approved by this court, that the following issues presented to the trial courts remain for decision by this court:

1. Does this Court have jurisdiction to hear this appeal?

2. Which of the several creditor’s claims presented to the County Court were properly allowed as debts against the decedent’s estate?

3. Were funds available for the payment of those creditor’s claims which are determined to be valid and correct • charges against the estate of the decedent ?

At the outset we are met with the issue of the jurisdiction to hear this appeal. This court has examined its own jurisdiction, as indeed it must, on the matters asserted in the motion to dismiss and on other matters not there asserted; and we' have concluded that the appeal was timely filed in this court.

The record in the trial courts lack much to be desired. It is confusing, at times con-tradictox-y, extends over many months of time and many hearings, involves separate sets of findings of fact covering the same tangled issues and altogether presents a legal maze seldom if ever compounded in 333 pages of record. On July 13, 1962, with all parties before the court and without any apparent objection to the proceedings the trial court entered an order, -which itself is not a model of clarity but nevertheless seems to have set aside all previous findings, orders and judgments and given a fresh start on appeal for all of the parties. The order recites:

“That there had previously been filed and signed by this court two separate judgments in this matter, each filed on a different date. That it is the desire and intent of the parties to appeal from a final judgment of this court, and such should be a single judgment combining all findings of fact and law by the trial court in this matter.”

The Trial Court then decreed:

“It is Therefore Ordered, Adjudged and Decreed By the Court that the combined journal entry of judgment in this matter, and all other journal entries of judgment previously prepared by the various- parties and signed by this court are specifically set aside and held void.”

Thereupon a new “journal entry of judgment” was filed. It is obvious to us that the trial court and all of the parties were using the phrase “journal entry of judgment” as synonymous with the judgment itself. Otherwise we find no explanation for the order of July 13, 1962. The order is ambiguous. Apparently the parties construed it in the light we have suggested because no motion to dismiss was filed with this court until it questioned its own jurisdiction and called for briefs on the question from the parties.

All agree that if the order of July 13, 1962 is to be interpreted as we have done the appeal was lodged within the time allowed by law. The interpretation of the parties to a judgment which is ambiguous, like the interpretation of an ambiguous contract, should be given weight by the court.

Likewise, the circumstances surrounding the making of the Judgment may be considered. The rule is stated in Freeman On Judgments, Vol. 1, 4th Edition, Article 76 pp. 132-133:

“In construing the provisions of a judgment the usual canons of construction should be applied. * * * In construing any portion of the language of a judgment, while it should be taken in its ordinary legal meaning, it must be considered in connection with its context and the judgment as a whole, and the circumstances surrounding the making of the judgment — the condition of the cause in which it was rendered.”

This we have done in resolving the issue of jurisdiction in its favor. We therefore hold that the appeal was timely filed and that this court has jurisdiction to determine the remaining issues before it.

We next proceed to a consideration of the validity of the creditor’s claims. Both County Court and District Court allowed all of the claims but the District Court held funds were not available for their payment.

In all 14 separate creditor’s claims were presented to the executor, approved by him and thereafter approved by the County Court. Of these claims those of Hotel Pharmacy, and Pawhuska Hospital were for last illness. The Hotel Pharmacy claim shows to have been presented to the executor on March 16, 1961, and actually paid on that date; however, it was not presented to nor approved by the County Court until March 28, 1961. Although vigorous attack is made on the claim in this court no specific objection seems to have been lodged to it in the court below. It is contended here that approval of the County Court was not timely endorsed on the claim. We do not interpret the Statute, 58 O.S.A. § 337 to require approval by the County Court within 10 days from the presentation to the executor. Since all parties agree the claim arose out of the last illness of the decedent, the reasonableness of the claim is not questioned and no specific objection was made to it in the court below because of the failure of the County Judge to approve the claim within ten days of its presentation to and approval by the executor, we need not decide whether this was improper, or if so its legal effect, because we conclude no successful attack may here be made on it when the issue was not raised below.

The claims of Johnson Funeral Home for burial of the decedent in the amount of $1,706.92 was not attacked in the court below and no good reason is herein indicated why it should not have been approved. Likewise the claim of Osage Marble and Granite Works in the original amount of $765.00 was allowed by the Executor and the County Court for only $150.00. No specific attack was made below and none is here made and that claim likewise is sustained.

The claims of Handy Grocery, Dowdy’s Grocery and C. R. Anthony Company were not questioned in the court below and cannot here be challenged.

We now approach the issue as to availability of funds for the payment of these claims. The decedent, Vera Harris, was an Osage Indian of the Yioth Indian blood who has a certificate of competency. Section 4 of the Osage Act of Congress of March 2, 1929 (45 Stat. 1480, 25 U.S.C. note to Section 331) provides that upon the death of an Osage Indian of one-half or more of Indian blood who does not have a certificate of competency the Secretary of Interior shall pay from the decedent’s funds “all lawful indebtedness and cost and expense of administration.” Pertinent to this appeal this statute further provides:

“Upon the death of any Osage Indian of less than one-half of Osage Indian blood or upon the death of an Osage Indian who has a certificate of competency, his monies and funds and other property accrued and accruing to his credit shall be paid and delivered to the administrator or executor of his estate to be administered upon according to the laws of the State of Oklahoma * *

Since Vera Harris had less than one-half Indian blood and also had a certificate of competency her estate falls within the purview of this statute. Her estate was subject to administration in the usual manner by the probate court of Osage County.

The decedent died on September 22, 1960. Osage Headright payments, including that of the decedent, began to accrue on July 1,, 1960 and were fully accrued on September 30, 1960. Agreeable to the custom and practice of the Osage Indian Agency these quarterly payments were segregated during the quarter immediately following their accrual. Here the quarterly payment for July, August and September, 1960, was actually received by the executor and deposited in his account on March 2, 1961. The County Court determined that the sum of $1,217.92 had accrued prior to the date of decedent’s death and that this sum was an asset of her estate subject to the payment of the claims of general creditors; that this sum together with a further sum of $100.73 or a total of $1,318.65 was available for the payment of claims of general creditors.

The District Court on appeal likewise determined that these claims were valid but because the executor had used the proceeds from the current and accruing quarterly Osage payment for payment of funeral bills and expenses of last illness held there were no funds legally available for that purpose.

Wherever conflict may yet exist between the holding of this court in Denoya v. Arrington, 163 Okl. 44, 20 P.2d 563 and Bruce v. Evertson, 180 Okl. 111, 68 P.2d 95, Tucker v. Brown, 185 Okl. 234, 90 P.2d 1071, in re Kohpay’s Estate, 206 Okl. 548, 245 P.2d 79 with the decision in Globe Indemnity Company v. Bruce, 81 F.2d 143, 10th Cir. (certiorari denied 297 U.S. 716, 56 S.Ct. 591, 80 L.Ed. 1001) we need not decide. Under the view we take of the matter these claims were payable under either rule.

The record is clear the executor used the monies which were available and sufficient for the payment of general creditors to pay expenses of the last illness and funeral expenses when any and all of the estate of the decedent was available for these purposes.

Plaintiff in error, Betty Jeanne Alexander, argues that the funeral claim is the claim of a general creditor and cites in support of this argument Lang v. Banner, 189 Okl. 606, 118 P.2d 639. The language of that case must be read in the context of its facts. In it the son of a decedent mother paid the funeral claim and thereafter filed claim therefor not against his mother’s estate but against the estate of claimant’s stepfather. Under the circumstances claimant was of course a general creditor as against his stepfather’s estate although he might well have been a preferred creditor, as subrogee of the original preferred creditor, of his mother’s estate. But we have here a situation where the executor paid a preferred claim out of funds which were available for the payment of the general creditors. Later the executor received other funds during the administration out of which the preferred claim could have been paid.

It is the duty of an executor or administrator to protect the claimants in an estate. In a sense he holds all receipts in trust for the payment of the debts of the decedent. See 21 Am.Jur. p. 375 and Scholtz v. Hazard, 68 Colo. 343, 191 P. 123. The executor here could have paid all of these general claims out of funds clearly available therefor and have paid the funeral expenses out of quarterly payments accruing after the death of the decedent. In that manner all just claims could have been paid in regular order. The executor, having mistaken the applicable law used funds which were clearly available for the general creditors in the payment of the preferred claim. We hold that when the executor later received in his hands monies available for the payment of the funeral expenses (which already had been paid out of funds otherwise available to the general creditors) this reimbursement of his accounts accrued to the benefit of the general creditors and marshalling of assets may here he used, in retrospect, so as to bring about a legal subrogation.

The general rule is found in 50 Am.Jur. 678-9, 680-1, as follows :

“Subrogation, frequently referred to as the ‘doctrine of substitution’, may be broadly defined as the substitution of one person in the place of another with reference to a lawful claim or right. It is a device adopted by equity to compel the ultimate discharge of an obligation by him who in good conscience ought to pay it. * * *

Legal subrogation is a creature of equity not depending upon contract, but upon the equities of the parties. In its more usual aspect, it arises by operation of law where one having a liability or a right or a fiduciary relation in the premises pays a debt owing by another under such circumstances that he is in equity entitled to the security or obligation held by the creditor, whom he has paid.

Legal subrogation, as distinguished from conventional subrogation, is a creature of equity, existing independently of custom or statute, although there are in some jurisdictions statutory provisions dealing with the matter. Legal subrogation does not depend upon contract, assignment, privity, or strict suretyship. It is not created by the order of the court recognizing it, but follows as the legal consequence of the acts and relationship of the parties.”

The Oklahoma legislature has attempted to state this rule, in one of its aspects, in 24 O.S.A. § 4 as follows:

“Where a creditor is entitled to restore (resort) to each of several funds for the satisfaction of his claim, and another person has an interest in or is entitled as a creditor to resort to some but not all of them, the latter may require the former to seek satisfaction from those funds to which the latter has no such claim, so far as it can be done without impairing the right of the former to complete satisfaction, and without doing injustice to third persons.”

In Hartford Accident and Indemnity Company v. First National Bank and Trust Company of Tulsa, 287 F.2d 69 (10th Cir.), it is said:

“Subrogation has its genesis in equity and its major objective is to effectuate the ultimate discharge of an obligation by the one who in good conscience should discharge it. Its function is to effectuate complete justice as between the litigating parties. Though based on equity, sub-rogation is frequently enforced in actions at law. The right does not arise out of contract. It usually arises where one party has the equitable right to step into the shoes of another in respect to rights against a third party.”

In Richardson v. American Surety Co., 97 Okl. 264, 223 P. 389 this court said:

“No doctrine of equity jurisprudence is more beneficient in its operation than is subrogation, and perhaps none stands in higher favor. No general rule can be laid down which will afford a test in all cases for its application, and its exercise depends upon the particular facts and circumstances of each case, and is not enforced as a matter of legal right, but in order to subserve the ends of justice in the particular controversy under consideration.”

We hold that in this case the doctrine of equitable subrogation applies and that these general creditors’ claims were and are payable from the funds received by the executor which replaced those used by him in the initial payment of the funeral bill and which otherwise would have been available for the payment of these general creditors’ claims. The executor will pay these general claims in the amounts allowed.

This cause is reversed and returned to the District Court of Osage County, Oklahoma for further proceedings not inconsistent herewith.

Judgment reversed

MILTON C. CRAIG, W. E. MADDUX, bruce McClelland, r. place MONTGOMERY, REUBEN K. SPARKS, and WILSON WALLACE, Special JJ., concur. JOHN LADNER, Special C. J., concurs in result. WALTER J. ARNOTE, Special Judge^*